Governor's Figures Misleading

News analysis

Taxpayers will pay dearly if state employees get raises -- but not as dearly as Gov. John G. Rowland claimed in his first televised press conference.

Rowland said Monday that the average income tax bill would rise by $515 per year if the raises were financed entirely by the income tax.

That's not true.

And it isn't necessary to wait for the promised rebuttal from angry state employee union leaders to reach that conclusion.

The figures that contradict Rowland were distributed to reporters by his own staff at the press conference.

Those projections show that if all 30 union contracts follow the pattern of the 10 arbitration awards issued so far, it would cost taxpayers $309 million in 1996-97.

Rowland used a figure of $636 million in his televised remarks, but failed to identify that figure for what it was -- an estimate of the cost of raises over four years, beginning with $24.7 million in the just completed 1993-94 fiscal year and peaking at $309 million in 1996-97.

Since $636 million is a four-year estimate, it would not have to be paid in a single year by income tax filers. Yet, that's the assumption underlying the $515-per-person figure used in his televised speech.

This was no mere slip of the tongue. Rowland read from a prepared text that included the income tax illustration as one way of impressing viewers with what a lot of money $636 million is.

The governor also said that $636 million would run the state prisons for a year and a half, that it would pay nearly half the state share of local public-education costs each year and that it equals about a third of annual state aid to cities and towns every year.

The problem with all these illustrations is that they compare a projected cost over four years to taxes or expenditures over a shorter period.

Lorraine M. Aronson, deputy budget director to Rowland, said there was no representation made at the press conference that $636 million was a one-year cost of the pay raises.

``These examples were intended to give the public a sense of how large that number is,'' she said. ``Our material shows what the annual costs are. Those numbers are in here along with the $636 million. No one here is attempting to say that in any single year that the cost is $636 million.''

But Rowland did say that, to a live television audience, when he alluded to the potential effect on the income tax.

``If the raises were to be funded from the income tax, the package of contracts before the House and Senate would require that to be increased by nearly 25 percent. It would cost the average Connecticut taxpayer $515 a year,'' he said.

When that statement was read back to Aronson, she defended it as ``valid for illustrative purposes.'' She said some taxpayers would pay less, some more.

``What we have undertaken is a public education campaign,'' she said. ``We're telling people that it matters [to them] when the General Assembly votes on contracts. There's a direct relationship between what happens there and the average family's pocketbook.''

Had Rowland used the $309 million estimate for 1996-97 rather than a four-year estimate, his computation would have yielded an average income tax increase of $250 -- less than half the $515, but still a large number.

Asked if that would have been more valid, Aronson said, ``I wouldn't say `more valid.' It's another way of demonstrating the impact.''

The state income tax is projected to raise about $2.7 billion in 1996-97, so paying for the state employee pay raises with the income tax would increase that revenue figure to $3 billion. That's an 11 percent increase, not 25 percent, as Rowland stated.

Furthermore, the projected state budget that year is $10.19 billion. The pay raises would increase that by 3 percent.

Rowland, in urging residents to call their legislators and ask for rejection of the arbitration awards, said the fate of his entire legislative program hinges on the outcome.

``These pay raises would keep me from accomplishing almost everything I was elected to accomplish,'' he said.

Foremost among his campaign promises was a pledge to cut the income tax by one-third over his first two years in office and to repeal it by 2000.

``A $636 million budget-buster virtually eliminates the possibility of a meaningful reduction in the income tax,'' Rowland said.

That almost certainly overstates the case. It will be tough for Rowland to cut the income tax, but the pay raises alone would not seem to be sufficient to turn a possible task into an impossible one.